Mar 22, 2011
Bulgari reopens in Japan, quake hits sales
Mar 22, 2011
PARIS | Tue Mar 22, 2011 - Roman jeweller Bulgari reopened all but one of its 40 shops in Japan, one of its biggest markets, on Tuesday as its chief executive predicted sales there would be weaker for at least one or two quarters.
Bulgari, which agreed this month to be bought by LVMH, the world's biggest luxury group, is one of many luxury companies to have been hit by the earthquake that rocked Japan on March 11, sending shares in the sector sharply down.
Sales had already been flat since the start of the year in Japan, which in 2010 generated 18 percent of Bulgari's total revenue, Chief Executive Francesco Trapani told Reuters in an interview on Tuesday.
"It is realistic to expect that sales will be softer than before for one or two quarters and after that the situation should go back to normality, assuming of course that the nuclear problem is over," Trapani said.
He declined to say how much sales would fall.
Japan is suffering from the world's worst nuclear crisis in a quarter of a century, triggered by an earthquake and tsunami that left at least 21,000 people dead and missing. The operator of a nuclear plant crippled by the disaster is still battling to stabilise its reactors.
Trapani said Bulgari, which employs 500 staff in Japan, had not repatriated them, in contrast to many other western employers such as LVMH and Richemont.
Bulgari has reopened all its shops in Japan apart from one in Sendai, which was damaged by the earthquake, though its stores are closing earlier because of power shortages.
U.S. jeweller Tiffany said on Monday sales in Japan would fall 15 percent this quarter after it had to temporarily close stores in the Kanto and Tohoku regions, which accounted for more than half of its sales in the country.
The hit was smaller than analysts had expected, however.
Japan, which accounts for about 11 percent of global luxury sales, is about the same size as China and ranks just behind the United Sates in terms of the luxury market.
When combining purchases at home and abroad, however, the Japanese are still considered the world's biggest buyers of luxury goods followed by the Americans and the Chinese.
Looking ahead, Trapani said the war in Libya could also weigh on luxury consumer sentiment if it dragged on and involved several countries.
"If it stays local, it will not negatively impact sentiment," Trapani said.
"Today, the preoccupation of many businesses (in luxury) is Japan of course and instability in the Arab world, which is not a good thing for people who want to invest," he added.
As part of LVMH's acquisition of Bulgari for almost $5 billion, Trapani will become head of LVMH's watch and jewellery division in July.
He said he had not yet decided who would succeed him as Bulgari CEO or whether candidates were within Bulgari or LVMH.
Trapani said Bulgari's strategy was not expected to change.
"Of course, being part of LVMH means we will have more means, financially and in terms of organisation," the CEO said.
Bulgari will benefit from LVMH's global retail network and improve margins through cost-sharing, and it will help the owner of Louis Vuitton handbags better compete with bigger watch and jewellery companies Richemont and Swatch.
Bulgari will generate 55 percent of LVMH's watch and jewellery sales.
"The brand overall will have more opportunities to grow faster," Trapani added.
(Editing by James Regan)
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